Joie de Vivre will cross California borders to expand its boutique business.
SAN FRANCISCO—Chip Conley knows how and when to come out. A prominent gay entrepreneur, he is the founder of Joie de Vivre Hospitality, a quirky collection of boutique hotels he launched in his native California in 1987. Now, he is ready to put his urbane and playful stamp on hotels outside the Golden State.
Armed with an approach based on the work of psychologist Abraham Maslow and a hefty financial commitment from Hyatt scion John Pritzker’s Geolo Capital, Conley is looking to acquire hotels in the western U.S., Hawaii, Manhattan, Boston, Washington, D.C., and Miami.
The strategy is cluster; unlike pioneering role model Kimpton Hotels & Restaurants, the dominant boutique brand, Joie de Vivre hotels cut across price points, even though they’re all individual, all boutiques and all third-party management contracts.
Conley, 50, is executive chairman and chief creative officer of Joie De Vivre Hospitality, a San Francisco-based collection of 34 hotels. He has a stake in 14 and Geolo owns two. Each JdV is based on a magazine, from Rolling Stone (the model for the Phoenix Hotel, the first JdV) to Wired, the platform for the Hotel Avante, a Silicon Valley property. The hotels aim to provide “identity refreshment” and serve as “mirrors for the aspiration,” Conley said in a mid-October address at the Lodging Hospitality/HVS Hospitality Management-sponsored Lifestyle/Boutique Hotel Development Conference in Miami.
The first five were transformations of pay-by-the-hour hotels, and the Phoenix rapidly became a favorite of rock ‘n’ roll bands and their tour managers. Other JdV hotels target niche markets, such as Google, which books 12,000 roomnights a year at the Avante and should simply buy the place, Conley said; and readers of Dwell magazine who patronize Hotel Vitale in the Embarcadero section of San Francisco, Conley’s home.
A capital infusion
In June, Conley announced a partnership with Geolo Capital, the equity investment arm of the John A. Pritzker family. San Francisco billionaire Pritzker is the son of Jay Pritzker, who founded the Hyatt hotel chain. Under the agreement, Geolo established an investment fund, its aim the acquisition of US$300 million to US$500 million in hotel assets during the next five years. Pritzker is now chairman of Joie de Vivre.
In a recent interview, Conley said that even though 75% of the 34 Joie de Vivre hotels are gaining market share, several in the portfolio have “serious debt situations” that are a “major distraction.”
“We manage hotels for other people,” he said. “The hotel may be gaining market share, but if you’ve got a 110% loan-to-value ratio, it’s all they can do to get out of the loan.”
One reason he allied with Pritzker was to diversify. Another “was making sure we had pockets to weather the storm” of this long economic downturn. Yet another was the opportunity to buy hotels in all-cash transactions.
“We’ll in some cases buy a platform, then bring their brand into our own. We are talking to people about that premise right now. There’s a lot of players out there who are smaller than we are who are finding it a struggle,” he said, comparing these times to the 1930s. “They’re too small to have distribution power.”
What drives Conley
As a child in Long Beach, California, Conley often visited Disneyland, where he developed some ideas he would apply to JdV. He was an all-star athlete in high school and in summer 1983, worked for Morgan Stanley in New York. That was when he came out—discreetly.
“I had a girlfriend through college and my first year of business school, but that summer in New York is when I first said, ‘OK, this is where I'm coming out.’ I came out to a couple people but I didn't publicly. But when I came back to Stanford Business School, I did start talking to friends about it and after my second year, when I was 23 I went to work for a sort of macho real estate development company and started to come out there. Being in San Francisco made it a little easier, but the process took a certain amount of faith and courage to believe that people would be okay with it."
Conley noted that in the San Francisco hotel business, many employees, especially at the front desk and in bars and restaurants, are gay and lesbian.
"That meant I was in a position to be able to be comfortable that I was in a habitat that might be friendly for this. Working for Morgan Stanley in New York was certainly a less friendly habitat.”
He had a good eye for design and though he doesn’t want to stereotype—he was an All-American high school athlete in water polo—he said, “I think men who are gay may have an eye for design, a certain love of empathy, and know what it’s like to have to serve other people … and on the boutique side of it, being really creative and at times a little outrageous gave me a little more license to be creative.”